Headlines

Time

Why so many Americans don’t have bank accounts

Not surprisingly, low-income people are the ones most likely to be underbanked, according to FDIC data. Among households with annual incomes of less than $15,000 a year, 28% have no bank account and another 22% have less than a full range of services. Rates of underbanking are similarly high among the unemployed, people without high school degrees and those under the age of 25. In addition, African-Americans, Native Americans and Hispanics have higher rates than Whites and Asians. Only about 5% of employed, middle-class Americans are without bank accounts, but more than 20% use financial services outside of the banking system – typically for reasons of convenience.

It’s one thing, of course, for relatively affluent people to pay a fee to cash a check because they are in a rush, and quite another for someone to rely on so-called alternative financial services for all of his or her transactions. Check-cashing services in New York are permitted to charge 1.91%. If someone with a $15,000 income uses them regularly to cash paychecks, that could cost up to $286 a year. Postal money orders cost $1.15 apiece, so that someone using them to pay three bills a month would spend another $41 a year. Other charges – for prepaid debit cards, say – could push the total cost to more than $500 a year. And the cost of consumer borrowing outside of the banking system is horrific. A 30-day auto-title loan charges interest equivalent to an annual rate of 50% to 100% or more.

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Because banking regulations make it impossible for banks to make money off them, so banks do not typically try to seduce them into the system.

If I want free checking, I have to have a savings account and a checking account where my paycheck is automatically deposited. If I do not have those things, I will be required to pay, or have something north of $10k in cash equivalents stashed in the bank somewhere.

As “banking reform” became law, the big banks that forgot about customer service started to cater only to wealthier people, and smaller banks and credit unions who might have competed well against the big boys by servicing small accounts got hindered by the “reform”.

People need to realize that this is a big problem because these nasty stubborn working poor and libertarian-conservatives are standing in the way of a cashless society. If only they could be controlled and forced into the system rather than desiring control of their own money on their own terms, currency can be undone and people will have whatever financial worth they’re told they can have.

For my 6th birthday, my late grandmother opened up a savings account for me, with an initial 5 dollar balance. I loved to save money here and there, go to the bank to deposit my “earnings” and watch as the figures in my passbook (remember those?) kept on increasing.

Oh, and they paid about 5% compounded interest on that account and there were no fees.

Eh. Low income individuals are often dealing with significant amounts of debt, and for them holding money in any sort of bank account is hazardous. Quite a few of my clients cash their checks at the same bank the note is drawn on, avoiding any fees, and deposit the funds on a prepaid debit card. Aside from missing out in the free toaster with new account, being unbanked isn’t the catastrophe that Time would have us believe.

I’m all about the bank, but you better believe that I have my “Obama is totally going to uck-fay everything up and I need some big cash in the house” money. I will never forget being ten cars back at noon on 9/11 trying to get some cash out of the ATM.

Not surprisingly, low-income people are the ones most likely to be underbanked, according to FDIC data. Among households with annual incomes of less than $15,000 a year, 28% have no bank account and another 22% have less than a full range of services.

Get ready for calls for even more to be taken from those who have (Bank accounts) to be given to those who don’t have (Bank accounts).

I know a very large scale building contractor who knowingly pay illegals by check bi-weekly.

The illegals take said checks to a check cashing outlet and for a modest fee get the cash.

You’re damn skippy they don’t open bank accounts and deposit their income into them. Say what you like about banks but they do actually run your social because they are required to. Employers, to this day, are still not.

Debit Card overdraft fees are a huge business for the banks, which is why the banks say you are “underbanked”. All banks do is scan your checks nowadays anyhoo. You can buy a money order for 99 cents, scan it into your computer and that’s as much work as the bank does for you. The only trick is you need a passbook account with $900 or so to cover the checks you cash there. You have your cash at your disposal for any emergency, yours or-the banks.

“Underbanked”?????? Wtf is that? I’m so sick of being over banked I wish the hell I could figure out how to withdraw from the system and still do business. I even get charged fees for depositing cash!!!!!! I despise banks and how they treat me and how they do business. I can’t wait for all of them to fail. Bunch of fckng vultures.